Limited Company Taxation overview

As an agent for company registration services, we ensure that our customers are well informed about their limited company tax obligations. If unsure, please seek the advice of a qualified professional. We can recommend professional tax and accounting services who can advise you on these matters. We can also provide these services if you wish to make sure all the below is done on time and dealt with in a professional matter.

Once we have incorporated your Company HMRC are informed and they then write to you to establish the status of your company going forward.

Apart from Taxes you will also have to file an Annual Return once a year with Companies House.

Limited company taxation covers several areas of business, and is collected and imposed in different forms such as on personal income (income tax through PAYE), taxable profits (corporation tax), and imports (excise duty), on goods and services (VAT) and capital gains (capital gains tax). Meanwhile, contributions such as National Insurance (NIC) which qualify you for certain state benefits, pension and support allowance are regarded as limited company taxation because they are mandatory. Other Items to consider are Stamp duty and Excise duties.

The main forms of limited company tax that your limited company will pay are:

Corporation Tax is a tax on profits made by a UK Company

Income Tax is a tax on personal income

VAT a tax on goods and services provided in the UK

PAYE and NIC as an Employer you would be liable to these

After registering your ltd company you must register for all of these.

Corporation Tax

Corporation tax must be paid every year by filing a Company Tax Return form along with your limited company accounts and computations.

With the exception of a few tax exempt entities/activities (e.g., profits from charities and fundraising organisations, sickness insurance) every limited company or organisation that generates profits is subject to corporation tax.

Since you have to report irrespective whether your company is dormant or active, you must be aware of the deadlines for submission of your computations to avoid penalties:

limited company is active within 3 months of having started business

new limited company is not yet active within 3 months of registering

limited company has become dormant as soon as it has stopped doing business

limited company is no longer dormant as soon as it starts back doing business

Limited Company Accounts (Ltd. Company Accounts)

To submit your yearly limited company accounts you can use the joint filing service of HMRC and Companies House. We can recommend a qualified accountant who would be able to submit your annual company accounts through the web filing program.

What are the Corporation Tax Rates for a UK Ltd. Company?

UK Limited Company with profits less than GBP 300,000

20%

UK Limited Company with profits less than GBP 300,000

24%

Current tax rates (2012) to be reduced by extra 2% by 2014: 2013 (1%) and 2014 (1%)

Payments are due 3 months and 2 weeks after the last day of company’s accounting period (where accounting period is less than 12 months).

You must to file your Company Tax Return within 12 months of the end of your company’s financial year. Penalties are charged if a UK companies taxes are late.

Limited Company Taxation: VAT in a Nutshell

VAT rates are in four categories, and are applied accordingly depending on the goods or services that your ltd. company supplies:

standard rate — 20%

reduced rate — 5%;

Zero — 0% (items that are subject to VAT but the rate is 0%)

exempt, i.e. outside the scope of VAT limited company taxation

When determining your VAT registration or liability for your company taxation, we recommend using services of a professional tax advisor or an accountant. International trade is a complex matter and requires specialist knowledge.

You can register for VAT limited company taxation even if your VAT taxable turnover does not meet the threshold since late registration penalties may apply.

When to Register for VAT?

Your limited company will need to register for VAT if:

The turnover exceeds the registration threshold of £79,000 (2013-14)

The turnover may exceed the VAT threshold within the next month of doing business

A Ltd company acquires a business that is registered for VAT

Your business imports goods from other EU Member States and the value of goods surpasses the £79,000 (2013-14) threshold for VAT registration

Serves as an agent to import and sell goods in the UK for a non-UK trader who is not registered for VAT

Imports goods temporarily from outside the EU with the intention to re-export within 2 years

Applications for VAT registration generally take one month to be processed. The delay may be longer if additional checks need to be done on the ltd. company. We can assist with VAT Registration for UK Residents however for Non-UK Residents we would have to recommend a partner as it is a much more complicated procedure.

PAYE and NIC

PAYE (Pay as You Earn) must be paid by all employers of as a ltd. company tax on behalf of their employees and self-employed persons.

National Insurance Lower Earnings Limit 2012-2013: £107 a week, £464 a month, £5,564 a year

Limited Company Tax Deadlines

PAYE

19th/monthly (if hand delivered)
22nd/monthly (electronically)
Every quarter if average PAYE is less than GBP 1,500

Employer Annual Return

By the end of the tax year and no later than May 19th of following year

NIC for company directors is calculated according to annual earnings and not the ordinary weekly or monthly intervals. As a result, NIC for employees of a ltd. company who become directors or cease from being directors must be calculated differently. This is because directors’ NIC’s are calculated on the basis of an annual earnings period, rather than the normal payment intervals (usually weekly or monthly) used for other employees.

More information on enrolling for VAT, PAYE, corporation tax and limited company taxation is available if you Contact Us.

LLP Taxation

It should be noted that LLP’s are not subject to corporation tax as a business entity, as the taxes are paid for by their member’s. The LLP members only pay Income Tax on the profits they make per year.